[Congressional Record Volume 145, Number 111 (Monday, August 2, 1999)]
[House]
[Pages H6776-H6779]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONSTRUCTION INDUSTRY PAYMENT PROTECTION ACT OF 1999
Mr. HORN. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 1219) to amend the Office of Federal Procurement Policy Act and
the Miller Act, relating to payment protections for persons providing
labor and materials for Federal construction projects, as amended.
The Clerk read as follows:
H.R. 1219
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Construction Industry
Payment Protection Act of 1999''.
SEC. 2. AMENDMENTS TO THE MILLER ACT.
(a) Enhancement of Payment Bond Protection.--Subsection
(a)(2) of the first section of the Miller Act (40 U.S.C.
270a(a)(2)) is amended by striking the second, third, and
fourth sentences and inserting in lieu thereof the following:
``The amount of the payment bond shall be equal to the total
amount payable by the terms of the contract unless the
contracting officer awarding the contract makes a written
determination supported by specific findings that a payment
bond in that amount is impractical, in which case the amount
of the payment bond shall be set by the contracting officer.
In no case shall the amount of the payment bond be less than
the amount of the performance bond.''.
(b) Modernization of Delivery of Notice.--Section 2(a) of
the Miller Act (40 U.S.C. 270b(a)) is amended in the last
sentence by striking ``mailing the same by registered mail,
postage prepaid, in an envelope addressed'' and inserting
``any means which provides written, third-party verification
of delivery.''.
(c) Nonwaiver of Rights.--The second section of the Miller
Act (40 U.S.C. 270b) is amended by adding at the end the
following new subsection:
``(c) Any waiver of the right to sue on the payment bond
required by this Act shall be void unless it is in writing,
signed by the person whose right is waived, and executed
after such person has first furnished labor or material for
use in the performance of the contract.''.
SEC. 3. IMPLEMENTATION THROUGH THE GOVERNMENT-WIDE
PROCUREMENT REGULATIONS.
(a) Proposed Regulations.--Proposed revisions to the
Government-wide Federal Acquisition Regulation to implement
the amendments made by this Act shall be published not later
than 120 days after the date of the enactment of this Act and
provide not less than 60 days for public comment.
(b) Final Regulations.--Final regulations shall be
published not less than 180 days after the date of the
enactment of this Act and shall be effective on the date that
is 30 days after the date of publication.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
California (Mr. Horn) and the gentleman from Texas (Mr. Turner) each
will control 20 minutes.
The Chair recognizes the gentleman from California (Mr. Horn).
Mr. HORN. Mr. Speaker, I yield myself such time as I may consume.
I include for the Record at this point a letter from the chairman of
the Committee on the Judiciary, the gentleman from Illinois (Mr. Hyde),
agreeing to the discharge of the Committee on the Judiciary from
further consideration of H.R. 1219.
[[Page H6777]]
House of Representatives,
Committee on the Judiciary,
Washington, DC, June 18, 1999.
Hon. Dan Burton,
Chairman, Committee on Government Reform, House of
Representatives, Washington, DC.
Dear Chairman Burton: I understand that the Government
Reform Committee desires to take H.R. 1219, the
``Construction Industry Payment Protection Act,'' to the
floor without this committee reporting the bill. The bill
contains certain matters within the Rule X jurisdiction of
the Judiciary Committee which were the basis of the bill's
referral to us. Such matters include amendments to the Miller
Act made by section 3 and procedural rules for promulgating
revisions to the Federal Acquisition Regulation established
by section 4.
In the interest of moving this non-controversial bill
forward expeditiously, I will agree to the Judiciary
Committee being discharged from further consideration of H.R.
1219. However, this should not be construed as a
relinquishment of the Committee's Rule X jurisdiction as to
the matters addressed by the bill or any further amendments
relating to it.
Please place a copy of this letter in the record of debate
on the bill.
Sincerely,
Henry J. Hyde,
Chairman.
Mr. Speaker, H.R. 1219, the Construction Industry Payment Protection
Act of 1999, is a bill introduced by my colleague, the gentlewoman from
New York (Mrs. Maloney). It would modernize the 1935 Miller Act.
Under the Miller Act, contractors performing work on a Federal public
works project costing in excess of $100,000 are required to furnish a
payment bond. The payment bond is intended to protect subcontractors
and suppliers and materials against the risk of nonpayment when working
on Federal construction projects.
The Act also requires a performance bond to guarantee completion of
the project.
In addition, the Miller Act requires the contractor to provide a
performance bond that guarantees completion of the project.
The 1935 Act caps the total amount of the payment bond at $2.5
million. Although that amount might have been appropriate for public
works projects in 1935, in many cases today it no longer provides
subcontractors with adequate protection.
Today, more than half of all Federal construction projects exceed
$2.5 million. H.R. 1219 seeks to correct this problem by requiring
general contractors to obtain payment bonds of an amount equivalent to
the total value of the contract.
As noted, H.R. 1219 would require general contractors to obtain
payment bonds of an amount equal to the total contract price unless the
contracting officer makes a written determination that a payment bond
in that amount is impractical. However, under no circumstances can the
amount of the payment bond be less than the amount of the performance
bond.
The bill also would expand the methods by which the subcontractors
could use to notify the prime contractor of their intent to seek
payment from the payment bond. It permits notice by any delivery
service that provides written third-party verification of delivery,
including the United States Postal Service or a private express
delivery service.
Moreover, the bill would require that any waiver of the Miller Act
protections by a beneficiary of those protections must be in writing
and may be made only after a subcontractor or supplier has furnished
labor or materials for use in the performance of the contract.
{time} 1500
The bill also requires that the Office of Management and Budget issue
final regulations implementing these provisions not less than 180 days
after enactment of this legislation.
H.R. 1219 represents a bipartisan effort to update the 1935 Miller
Act. This bill contains proposals to amend the Miller Act that address
some of the concerns of a variety of trade associations representing
essentially every segment of the construction and surety industries.
Our thanks go to the Democrats and Republicans who have worked together
long and hard to bring this important bipartisan measure to the floor.
I was pleased to be a cosponsor of the gentlewoman from New York's
bill, the prime author, and the gentleman from Virginia (Mr. Davis) was
also one of the key people in assuring that these different parties
came together. The time has come to modernize the Miller Act. I urge my
colleagues to support this measure.
Mr. Speaker, I reserve the balance of my time.
Mr. TURNER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, this bill was introduced by the gentlewoman from New
York (Mrs. Maloney) as a means of addressing some very serious concerns
surrounding the bond requirements established in the Miller Act of
1935. I want to commend the gentlewoman from New York for her
leadership in this legislation, specifically her work in bringing all
the parties together that have an interest in this bill, working with
them, ensuring that all of the concerns that were laid on the table by
all of the parties were addressed. She did an outstanding job in
working in a very bipartisan way on this bill.
Specifically, subcontractors who perform construction projects for
the Federal Government have raised questions about the adequacy of the
payment bond requirement. The gentlewoman from New York as a member of
the Committee on Government Reform, former ranking member of the
Subcommittee on Government Management, Information, and Technology, has
been persistent in trying to correct the deficiencies of the current
law.
H.R. 1219 would remedy these problems and ensure that the payment
bond is great enough to protect all of the subcontractors. At the same
time the legislation will modernize and strengthen the Miller Act and
will provide a means of improving a relationship of the subcontractors
that has been long needed.
This bill was reported by the Committee on Government Reform on May
19 by voice vote. The measure has also been referred to the Committee
on the Judiciary which has discharged the bill. I would like to thank
particularly the gentleman from Pennsylvania (Mr. Gekas) and the
gentleman from New York (Mr. Nadler) for their help in crafting this
bill.
Mr. Speaker, I reserve the balance of my time.
Mr. HORN. Mr. Speaker, I yield such time as he may consume to the
gentleman from Virginia (Mr. Davis). He has done an outstanding job in
bringing many of the parties together on this particular bill and we
deeply appreciate his work on it.
Mr. DAVIS of Virginia. Mr. Speaker, I thank the chairman of the
subcommittee for yielding me this time and I particularly thank the
author of this bill the gentlewoman from New York who has worked, I
think, over and beyond the usual call of duty in trying to bring
consensus to something very technical but I think something very
meaningful to government contractors and subcontractors and sureties.
I rise today in support of H.R. 1219, the Construction Industry
Payments Act of 1999.
This is legislation we have been involved with since the 105th
Congress when the gentlewoman from New York began working with the
affected industry groups to find consensus on updating the original
Miller Act of 1935. I am happy to say that this bipartisan cooperation
resulted in a strong bill that industry, Congress and the Federal
Government can all support. It is fiscally responsible and it offers
reasonable protections to all parties involved in this type of Federal
procurement.
H.R. 1219 amends the 1935 Miller Act which has stood the test of time
very well. It has needed relatively little legislative attention or
congressional oversight since its passage. Currently, the Miller Act
requires a contractor awarded a Federal contract in excess of $100,000
to furnish the government with a performance bond and a payment bond.
These bonds protect the government and certain persons providing labor
and material for performance of that work. H.R. 1219 prepares the
Miller Act for the 21st century. It should achieve its objectives
without unreasonably increasing the financial exposure or placing
additional burdens on the prime contractor or the surety bond producers
and corporate sureties that provide Miller Act bond payments. It
modernizes the act in three areas: The legislation raises the payment
bond to the value of the contract award, allows receipt of notice
through any method that provides written third
[[Page H6778]]
party verification of receipt, and it prevents any waiver of the Miller
Act rights prior to the commencement of the work. These three key
updates of the 1935 legislation enhance the procedures and protections
of the Miller Act for the government and those with rights under the
act as we continue to update our procurement procedures the next
century.
I am particularly impressed with H.R. 1219 and the reasonable updates
of the Miller Act that allow it to be particularly effective in
protecting all parties in the contracting process. Not only does it
preserve the authority of the United States courts to adjudicate issues
under the Miller Act but it preserves the freedom of the contractor and
the subcontractor to choose within their own contract the particular
dispute resolution process that will govern their dispute. This is an
effective reform that focuses on everyone's goal, providing the best
product to the Federal Government in a timely manner. Additionally,
H.R. 1219 maintains a subcontract provision that allows for requiring
arbitration or another alternative dispute resolution process. A
protected person's Miller Act rights would be preserved by a timely
suit in the District Court that can be stayed pending the subcontract
dispute resolution process.
Simply put, this legislation modernizes the procedures and
protections of the Miller Act, preserves the exclusive jurisdiction of
the U.S. District Court to resolve issues arising under the Miller Act,
and respects the freedom of the contractor and subcontractor to choose
their own dispute resolution process, thereby bolstering the Federal
Government's strong policy in favor of alternative dispute resolution.
Finally, I want to again thank the gentlewoman from New York for her
willingness to sit down and negotiate on this legislation what appeared
to be differences too great to overcome in the waning days of the 105th
Congress. Instead this has resulted in a strong, updated Miller Act
early on in this Congress. I believe the extensive negotiations between
the gentlewoman from New York, myself and others distilled the key
elements of the Miller Act to address and improve future situations in
Federal contracting. H.R. 1219 is legislation that both enhances and
preserves the 1935 legislation. This could not have occurred without a
willingness to build consensus or work together. I would also like to
thank the many industry organizations that agreed to sit down and come
up with reasonable compromises that helped us develop the strong bill
before us today. In particular, I want to thank the Associated Builders
and Contractors of America, the Surety Association of America, the
American Insurance Association, and other organizations that I will
insert in the Record.
I urge the passage of this bill. I would also like to thank Amy
Heerink and Melissa Wojciak from my staff.
Additional Industry Groups Who Assisted in Drafting the Miller Act,
H.R. 1219, the Construction Industry Payment Act
Air Conditioning Contractors Association
American Insurance Association
American Subcontractors Association
Mechanical Contractors Association of America
National Association of Plumbing-Heating-Cooling Contractors
National Association of Surety Bond Producers
National Electrical Contractors Association
Painting and Decorating Contractors of America
Sheet Metal & Air Conditioning Contractors National
Association
Surety Association of America
American Fire Sprinkler Association
Architectural Woodwork Institute
Association of the Wall & Ceiling Industries-International
Automatic Fire Alarm Association
Independent Electrical Contractors
Mason Contractors Association of America
National Association of Credit Management
National Ground Water Association
National Insulation Association
World Floor Covering Association
Mr. TURNER. Mr. Speaker, it is an honor for me to yield such time as
she may consume to the gentlewoman from New York (Mrs. Maloney). I too
would like to thank the gentlewoman for the leadership she has provided
on this bill. She has spent more time working on this than any other
Member of this House. She is the sponsor of this bill.
Mrs. MALONEY of New York. Mr. Speaker, I thank the ranking member for
yielding me this time and I thank him for his leadership and support.
The best legislation is bipartisan and this has truly been a
bipartisan effort over the past 3 years. I particularly congratulate
the gentleman from California (Mr. Horn) with whom I have worked in a
constructive way on many pieces of legislation before this body and the
gentleman from Pennsylvania (Mr. Gekas) who likewise led on this effort
and the gentleman from Virginia (Mr. Davis) who led actually a task
force over the last summer between the different bodies that came
forward with a consensus and compromise bill. And finally the
stakeholders, all of the industries involved, over 25 industries came
together and signed their own contract in support of the legislation
and their pledge to work to pass it. So it has indeed been a combined
effort which will ultimately not only help the employers and the
employees but the American taxpayer, because the cost of the jobs will
go down because those bidding on them will know that the risk of not
being paid will now be covered and that risk will not be built into
their bid. So it has been a day where everyone benefits in our country
and I am very proud to have been part of the team that made this
happen.
This is truly a historic day for the construction industry and their
workers. Today we are passing bipartisan legislation that will restore
full payment protection for construction firms and their employees who
do business with the Federal Government. Thanks to this bill,
subcontractors who work on Federal projects will actually be paid and
will not have to worry about being paid for their work. H.R. 1219 will
modernize the 65-year-old Miller Act which was passed in 1935 to
provide payment protection for construction subcontractors and
suppliers. Under the Miller Act, prime contractors on Federal projects
are required to purchase two types of surety bonds, one, the
performance bond which assures the government that the work will in
fact be completed, and a second, the payment bond that provides payment
protection for subcontractors and suppliers. The payment bond is
critical, because it is the payment protection of last resort in the
event of a default on the part of the prime contractor. Yet under the
Miller Act's depression era requirements, prime contractors are not
required to obtain a payment bond equal to the full value of the
contract. In fact, for contracts of $5 million or more, the payment
bond need not be worth more than $2.5 million regardless of the size of
the project. Since 1935, Federal construction projects have changed
dramatically in size and dollar value. The protections afforded by the
Miller Act may have been adequate in 1935, but they are simply not
sufficient for today. In fact, if the value of $2.5 million were simply
adjusted for inflation, it would now be at least $30 million. With
Federal construction projects costing hundreds of millions of dollars,
$2.5 million is simply not enough to provide payment protection for
subcontractors, particularly those working in the later stages of
complex, multi-year construction projects.
Earlier this year, President Clinton announced that the Federal
Government, along with Senator Moynihan, would be taking the lead in
renovating the Farley Building in my home city of New York as part of
the Penn Station mass transit redevelopment project. It is estimated
that this project will cost almost $400 million. Now, under the Miller
Act, the general contractor would only be required to furnish a payment
bond worth $2.5 million, clearly not enough to provide protection for
subcontractors and suppliers and their workers on a $400 million
project. But thanks to this legislation that we are about to pass
today, the subcontractors working on the Farley Building will actually
be paid and will enjoy full payment protection.
I learned firsthand about the problems of the Miller Act when I was
contacted by one of my constituents, Fred Levinson, in 1997. Fred owns
a subcontracting firm in my district. Fred Levinson was hired to work
on a project for the Federal Bureau of Prisons for over $100 million.
But when the prime contractor on the building was terminated, Mr.
Levinson was left without any way to collect the money he was owed for
the work that he performed. As a result, he lost $9.5 million simply
because the Miller Act did not provide for full payment protection. Mr.
Levinson was fortunate enough to
[[Page H6779]]
be able to save his company, but this payment problem still forced him
to lay off employees and scale back his business. Other subcontractors
on big Federal projects are simply not so lucky and risk bankruptcy
when the prime contractor defaults.
Thanks to this bill, no subcontractor in the future, including those
working on the Farley Building or any Federal building, will have to
suffer from inadequate payment bond protection as did my constituent
Fred Levinson. This is also, I might add, a case study in democracy, an
example of how one person can come to a legislator, point out a
problem, and work with them to solve it and to make a difference. I
would like to dedicate my work on this bill to Fred Levinson, who
brought it to my attention.
Mr. Speaker, as someone who has long been interested in Federal
procurement policy, I can speak firsthand to the importance of full and
timely payment to all segments of the construction industry. In
particular, small firms face enormous risks when they are not paid for
work they complete. Many firms across the country have risked
bankruptcy simply because they were not paid on time or in full by a
project owner. Cases in which the Federal Government is the owner of
the project are certainly no exception.
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This bill will make three important changes to the Miller act.
First, it will require that prime contractors working on Federal
projects furnish a payment bond of a value equal to the value of the
contract they have been awarded. This provision will ensure full
payment protection for subcontractors who choose to work on Federal
projects. They will no longer be a $2.5 million limit.
Second, this bill will modernize the provisions of the Miller act
which deal with notification of an intent to make a claim on a payment
bond. Current law permits notification only by certified mail. Under
this bill, notification will be permitted by any means that permits
written third-party notification of delivery. In this era of overnight
mail and electronic commerce, it simply makes no sense to permit
notification only through registered mail.
Finally, this bill includes a provision that prohibits any waiver of
the right to sue under a payment bond unless that waiver is signed by
the person whose right is waived after they have commenced work on the
project. This will ensure that no subcontractor waives his or her right
to sue before beginning work on a project. This provision is critical
to protecting the rights of subcontractors throughout the bidding
process and beyond.
I always believe that the best legislation is bipartisan, and that is
certainly true in this case. This legislation enjoys broad support from
Members across the political spectrum. This bill grew out of a hearing
that was held jointly by my friend from California (Mr. Horn) and my
friend from Pennsylvania (Mr. Gekas).
At that hearing we heard from several witnesses who spoke on the need
to modernize the act, including my constituent Fred Levinson and one of
Chairman Gekas' constituents, Micki Weaver. Mrs. Weaver, who owns a
small specialty firm told of how the inadequacies of the Miller act led
her to avoid bidding altogether on future Federal projects.
Both the gentleman from California (Mr. Horn) and the gentleman from
Pennsylvania (Mr. Gekas) agreed that the Miller act needed to be
modernized and joined me as an original sponsor. I am very grateful for
their hard work as well as that of their staffs and my own, staff which
have helped to get us to where we are today. In addition, the gentleman
from Indiana (Mr. Burton) and the gentleman from Illinois (Mr. Hyde)
both were instrumental in moving this bill through the legislative
process, as were the ranking members, the gentleman from California
(Mr. Waxman) and the gentleman from Michigan (Mr. Conyers).
My friend from Virginia (Mr. Davis) took the lead in getting everyone
involved in this issue to agree to sit down at the table and negotiate
so that we could reach the agreement on the legislation we have before
us today. In addition, many other Members of this House, including the
gentleman from Florida (Mr. Scarborough), the gentleman from Texas (Mr.
Sessions), the gentleman from Texas (Mr. Smith), and the gentleman from
Pennsylvania (Mr. Kanjorski) have supported and worked on this
legislation from the beginning and were very instrumental in moving it
to the floor today.
Equally important, Mr. Speaker, is the hard work that many of the
industry groups have done. I am pleased that every industry group with
an interest in modernizing the Miller act supports this bipartisan
legislation. This bill enjoys the backing of at least 25 industry
organizations, all of which have had a vested interest in the payment
bond protection afforded by the act.
In particular, I would like to thank the American Subcontractors
Association which has spearheaded the broad-based coalition to
modernize the Miller act for their hard work on this bill as well as
that of the Associated General Contractors of America and the Surety
Association of America, both of which played a critical role in the
negotiations which led to this bill.
Mrs. MALONEY of New York. Mr. Speaker, finally I am very pleased to
announce that the administration has recently said that it, too,
supports the bill. This bill will bring about a common sense reform
that will make a tremendous difference for construction subcontractors
and their workers who do business with the Federal Government. It will
not cost the taxpayers anything, and in fact it might lower the cost of
Federal projects.
Mr. Speaker, I urge all Members to support this important bipartisan
bill.
Mr. TURNER. Mr. Speaker, I have no further requests for time, and I
yield back the balance of the time.
Mr. HORN. Mr. Speaker, I yield myself such time as I may consume.
I just want to, in conclusion, note that the gentleman from Texas
(Mr. Turner), the ranking minority member on the subcommittee, has been
very helpful on this; and I mentioned earlier, I will mention again,
the gentleman from Pennsylvania (Mr. Gekas) is a very distinguished
legislator from Pennsylvania and a key person on the Committee on the
Judiciary, and the gentleman from Illinois (Mr. Hyde) gave the waiver
of this bill to the floor, and we are extremely grateful for that
bipartisan, bi-committee cooperation.
But in closing, I want to say to the gentlewoman from New York (Mrs.
Maloney) who put it right on the nose, this is a case study in
democracy. Everyone that is listening or hearing or reading the Record
is going to see this is an example of a constituent walking through
their Representative's door and say, Look, I've had a problem here. Can
you do anything about it? A lot of us have had that experience, and the
fact is people do not need to go through lobbyists; they do not need to
go through people that are at PAC parties or anything else. They can
just walk into their legislator, and if they got a good case, something
will happen. The gentlewoman from New York (Mrs. Maloney) showed
something that happened, and all of us cooperated to do it because we
knew this was just and we needed to update that law, and I would hope
that we have a unanimous vote of the House.
I want to thank my own majority staff, George, the chief counsel and
staff director, Randy. The counsel and professional staff member have
worked with the staff of the gentlewoman from New York (Mrs. Maloney)
and the staff of the gentleman from Pennsylvania (Mr. Gekas), and we
thank them all for their help. I urge adoption of this measure.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from California (Mr. Horn) that the House suspend the rules
and pass the bill, H.R. 1219, as amended.
The question was taken.
Mr. HORN. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
____________________